On June 5, 2024, Five Below Inc (FIVE, Financial) released its 8-K filing announcing financial results for the first quarter ended May 4, 2024. Five Below Inc is a specialty value retailer offering merchandise targeted at the tween and teen demographic. The Company's edited assortment of products includes select brands and licensed merchandise.
Performance Overview
For the first quarter of fiscal 2024, Five Below Inc reported net sales of $811.9 million, an 11.8% increase from $726.2 million in the same period last year. However, comparable sales decreased by 2.3% compared to the first quarter of fiscal 2023. The company opened 61 new stores, ending the quarter with 1,605 stores in 43 states, representing a 17.4% increase in store count from the previous year.
Despite the increase in net sales, operating income declined to $36.2 million from $42.4 million in the first quarter of fiscal 2023. Adjusted operating income, excluding a $2.0 million non-recurring expense related to employment-related litigation, was $38.2 million. The effective tax rate increased to 23.5% from 18.6% in the same period last year.
Financial Achievements and Challenges
Five Below Inc reported a net income of $31.5 million, down from $37.5 million in the first quarter of fiscal 2023. Adjusted net income, excluding the non-recurring expense, was $33.0 million. Diluted income per common share was $0.57, compared to $0.67 in the same period last year. Adjusted diluted income per common share was $0.60, missing the analyst estimate of $0.64.
Joel Anderson, President and CEO of Five Below, stated, "While our first quarter sales were disappointing, disciplined cost management enabled us to deliver adjusted EPS within our earnings outlook. Needs-based items such as those in our Candy, Food, and Beauty departments outperformed expectations and drove positive sales results. We also saw positive comparable sales from our higher income customers; however, the macro environment disproportionately impacted our core lower income customers, resulting in overall comparable sales declines."
Income Statement Highlights
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Net Sales | $811.9 million | $726.2 million |
| Operating Income | $36.2 million | $42.4 million |
| Net Income | $31.5 million | $37.5 million |
| Diluted EPS | $0.57 | $0.67 |
Balance Sheet and Cash Flow
As of May 4, 2024, Five Below Inc reported cash and cash equivalents of $96.3 million, down from $179.7 million at the end of the previous quarter. The company repurchased approximately 182,000 shares at a cost of approximately $30.0 million during the first quarter. Total current assets stood at $1.15 billion, while total current liabilities were $741.6 million.
Outlook for Fiscal 2024
For the second quarter of fiscal 2024, Five Below Inc expects net sales to be in the range of $830 million to $850 million, with net income between $32 million and $38 million. Diluted income per common share is projected to be between $0.57 and $0.69.
For the full year of fiscal 2024, the company anticipates net sales between $3.79 billion and $3.87 billion, with net income ranging from $275 million to $297 million. Adjusted net income, excluding the non-recurring legal expense, is expected to be between $277 million and $299 million. Diluted income per common share is projected to be between $4.97 and $5.37, with adjusted diluted income per common share ranging from $5.00 to $5.40.
Five Below Inc remains committed to its growth strategy, planning to open approximately 230 new stores by the end of the year. The company continues to focus on offering trend-right, high-quality products at value prices to attract its core tween and teen demographic.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Five Below Inc for further details.
